A Worker-Owned Cooperative Tries to Compete With Uber and Lyft

For years, Uber and other ride-hailing companies offered the promise of entrepreneurship to drivers. Drivers who were eager to set their own schedules signed up in droves, propelling the gig economy into a multibillion-dollar industry.

But some drivers never received the control and independence they had expected. They struggled with the costs of vehicle maintenance, loans and insurance, and they questioned whether Uber and Lyft paid a fair wage. Legislative efforts to grant them employment benefits were thwarted.

Now, dissatisfied drivers and labor advocates are forming worker-owned cooperatives in an attempt to take back some of the money — and power — in the gig economy.

But once the supply of driver recovers, Uber’s wages will most likely fall. The founders of the Drivers Cooperative said members of the group struggled to keep up with their expenses when they earned typical ride-hail wages.

A spokeswoman for Lyft, Julie Wood, said, “We’re constantly working to improve the driver experience on our platform and share the goals of allowing drivers to work efficiently and independently.” A spokesman for Uber declined to comment on the cooperatives.

The economic stress caused by the pandemic has prodded workers to use cooperatives as a lever against existing companies and — they hope — to increase their pay, said Ariana R. Levinson, a professor at the University of Louisville’s Brandeis School of Law who studies employee ownership.

Although it is challenging for gig workers to organize, Ms. Levinson said they had formed small food delivery and ride-hailing cooperatives. “Independent contractors are really successfully using the co-op model to organize themselves and be able to compete for a living wage,” she said.

“I’ve never seen this hunger for change that exists with drivers. Every single transaction reveals exploitation,” said Erik Forman, a labor organizer and a founder of the Drivers Cooperative. “They feel like a way to regain control is to have control and ownership over the platform.”

Mr. Forman started the cooperative with Alissa Orlando, a former head of operations for Uber’s business in East Africa, and Ken Lewis, a black-car driver in New York City. Ms. Orlando said she had left Uber after witnessing driver outcry over pay reductions.

She started researching cooperatives during the pandemic as Uber and Lyft drivers struggled to gain access to unemployment insurance and adequate protective gear. Mr. Lewis and his brother worked in the taxi and black-car industry, but he said they had dreamed about running their own business.

The Drivers Cooperative gets technical and business assistance from volunteers in the tech industry, Ms. Orlando said.

The cooperative aims to raise pay for drivers, and to address other common concerns, like predatory loan rates and surprise deactivations, which cut them off the apps that connect them with passengers. The group is teaming up with the Lower East Side People’s Federal Credit Union to help drivers refinance their vehicle loans, an effort it hopes will further reduce their expenses.

In 2017, Uber agreed to a $20 million penalty with the Federal Trade Commission to settle claims that it misrepresented driver earnings and loan terms. The company no longer offers vehicle financing.

Drivers said they would most likely continue to drive for gig companies or black-car services in addition to the Drivers Cooperative, adding it to the array of ride-hailing and delivery apps on their phones.

“Working with Uber has been something you do because you don’t have another alternative,” said Michael Ugwu, who has driven for Uber for six years. He said he would continue driving for Uber, but would give priority to customers who requested rides through the cooperative’s app.

“Having your own business is the way forward and the way out,” Mr. Ugwu said. “Even if I make less money, I will focus on the co-op to make sure we succeed.”

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